On June 24, 2011, then-Governor Beverly Purdue signed H 709——"Protecting and Putting North Carolina Back to Work Act" into law. As part of this Legislative Reform, North Carolina Employers now have an additional defense (misrepresentation) available to workers’’ compensation claims arising on or after June 24, 2011. However, in order to use this defense Employers must do their homework BEFORE an alleged work accident happens.

An Employer may plead an affirmative “" Misrepresentation Defense”" when an employee intentionally misrepresents his/her physical condition to the Employer at the time the employee is entering into the employment relationship, and the employee alleges a work injury with a causal tie to the misrepresentation.

An Employer bears the burden of proving each and every element of the “Misrepresentation Defense” by a preponderance of the evidence.

Pursuant to NCGS §§ 97-12.1, an Employer must prove ALL of the following elements to succeed on the defense:

(1) The employee knowingly and willfully made a false representation as to the employees physical condition;

(2) The employer relied upon one or more false representations by the employee and that reliance was a substantial factor in the Employers decision to hire the employee;

and

(3) There was a causal connection between the false representation and the employees injury or occupational disease.

To satisfy the first and second elements of the Misrepresentation Defense, an employer may gather information on a perspective employees physical condition to determine whether he/she can safely perform the job BEFORE finalizing the employment relationship.

Timing is vital.

To preserve the Misrepresentation Defense AND to ensure compliance with employment laws/regulations such as the Americans with Disabilities Act, an employer should ask about the employees physical condition to determine whether he/she can safely perform the job:

(1) At the time of hire;

(2) At the time of receiving notice of the removal of conditions from a conditional offer of employment;

or

(3) During the course of a post-offer medical examination.

The key to successful implementation of the Misrepresentation Defense is a top-notch hiring program. Specifically, an Employer may find it useful to:

**Have the perspective employee sign off on the Job Description, thus confirming both his/her understanding of the requirements and functions of the position, as well as his/her affirmative representation that he/she is physically capable of performing the essential functions of the job, with or without reasonable accommodation;

(2) Utilize a Post-Offer, Pre-Hire Questionnaire to ask for information such as prior work injuries, medication usage, work restrictions, surgeries, and permanent partial disability ratings.

**The time to utilize this tool is once a conditional offer of employment has been extended. Successful completion of the Post-Offer, Pre-Hire Questionnaire is a condition precedent to the employment offer being finalized.

**Much like with the Post-Offer, Pre-Hire Questionnaire, the time to utilize this tool is once a conditional offer of employment has been extended. Successful completion of the Post-Offer, Pre-Hire Physical is a condition precedent to employment being finalized.

By utilizing these practices, an Employer is clarifying the nature of the position and the importance of securing an employee who is able to perform the essential functions and responsibilities of the job. These practices give a perspective employee the opportunity to reveal that he/she is physically capable of performing the job, and the Employer’’ s reliance on these disclosures is inferred and expected.

As for the third and final element of the “Misrepresentation Defense," an Employer must prove there is a causal connection between the alleged work injury and the physical conditions falsely represented to the Employer by the employee at the time of his/her hire. Specifically, the question is whether the employees undisclosed physical condition increased his/her risk for injury.

By developing a comprehensive hiring program, not only will an Employer ensure perspective employees are physically capable of performing the job, but an Employer also protects itself against potential future workers’’ compensation claims should a perspective employee misrepresent his/her physical abilities.

This blog was originally posted in the DRI communities on September 9. If you are a committee member of any of our thirty substantive law committees, please click here to log in and gain access. If not, we encourage you to join a committee that best suits your practice.

On May 21, DRI rolled out the new committee online communities. The new communities will enhance DRI’s web presence and will allow committee members to connect with each other and share information more easily. Each community will have a discussion list, which will replace the current list serve, as well as a document library, blog, and calendar. Committees will also be able to post announcements about their seminars and publications, and promote open positions and volunteer opportunities. All posts are sent to members as a daily digest from the communities, unless a member changes his or her settings to real-time delivery. The communities are designed to be the hub for all committee activity.

There are six substantive law committees serving as the pilot group: Commercial Litigation, Employment and Labor Law, Product Liability, Women in the Law, Workers’ Compensation, and Young Lawyers. Additional committee communities will go live over the course of the year.

Members can access the communities through the DRI website, www.dri.org (there is a new link in the top blue navigation bar). Committee members are automatically members of the respective community and are being notified via email. Members should call (312) 695-6221 if they are having trouble logging in to the site.

California Court of Appeals for the Fourth District Rules Insurance Broker Had No Duty To Investigate Insured’s Coverage Needs

On October 4, 2013, the California Court of Appeals for the Fourth District reaffirmed prior rulings regarding the duties of an insurance broker in procuring coverage in San Diego Assemblers, Inc. v. Work Comp for Less Insurance Services, Inc. Assemblers, a remodeling contractor, contacted its broker, Work Comp for Less, to procure a liability policy. It requested only the lowest priced policy available and desired limits, but did not request any specific coverage. Work Comp responded with several plans and Assemblers chose one, without asking any questions concerning the coverage. Assemblers never at any time indicated that it did not want a policy with a manifestation endorsement, or with a prior work completed exclusion. In 2004, Assemblers performed work on a restaurant; in 2008 an explosion and fire caused substantial property damage. The restaurant’s insurer, Golden Eagle Insurance, pursued Assemblers for the damage. Assemblers tendered the claim to its insurer in 2004, Lincoln General Insurance Company, and its insurer in 2008, Preferred Contractors Insurance Company.

Thereafter, Lincoln General denied Assembler’s claim asserting a manifestation endorsement limiting coverage to injury or damage first manifested during the policy period. Preferred Contractors denied coverage asserting the period completed work exclusion. Assemblers informed Golden Eagle that it did not have coverage and stated that it could sue Assemblers. Assemblers thereafter filed bankruptcy and any and all claims in relation to the matter were assigned to Golden Eagle.

Golden Eagle responded by filing suit in Assembler’s name, naming Work Comp as defendant and alleging the broker negligently failed to procure insurance for Assemblers that would cover the fire. Work Comp responded by filing a motion for summary judgment, asserting it had no duty to provide Assemblers with different or additional coverages, as well as asserting the defenses of the superior equities doctrine and statute of limitations. The trial court granted the motion, stating it had no duty to provide different coverage. The court did not consider the issues of the superior equities doctrine or statute of limitations. The plaintiff appealed.

On review, the California Court of Appeals for the 4th District considered the superior equities doctrine, as well as the broker’s duty to procure a different policy.

On the issue of the superior equities doctrine, the Court noted that, though Golden Eagle brought suit as Assembler’s assignee, the analysis of any claimant in subrogation was the same and such a claimant must first demonstrate a right in equity to be entitled to subrogation. An insurer can show this by establishing a position superior to the party to be charged. This cannot be established where the party to be charged is not the wrongdoer whose act or omission caused the underlying loss. Here, there was no evidence Work Comp caused the restaurant fire, nor that it agreed to indemnify Assemblers. Therefore, pursuant to the superior equities doctrine, Golden Eagle’s claim must fail.

The Court next considered whether Work Comp had a duty to procure prior completed work coverage. The Court stated the law is well-settled that insurance brokers owe a limited duty to their clients only to use reasonable care, diligence, and judgment in procuring insurance. This duty is not breached unless the broker misrepresents the nature, extent, or scope of the coverage being offered, there is a request by the insured for a particular type of coverage, or the broker assumes an additional duty by express agreement or by holding itself out as have a certain level of expertise. Golden Eagle argued that Work Comp had an implied duty to investigate Assembler’s coverage needs and procure an appropriate policy. The Court, however, declined to follow this reasoning citing public policy reasons and stating that to create an implied duty in insurance brokers to investigate coverage needs would result in the overselling of insurance to avoid professional liability.

The trial court’s ruling was affirmed.

This case serves to remind brokers of their duties in procuring insurance coverage, as well as the possibility of creating additional duties. While a broker’s duty may be limited, it is important to recognize that a broker can breach the duty by misrepresenting the coverage offered, or by assuming additional duties either by agreement or holding itself out as an expert in specific fields.

This blog was originally posted on November 19, 2013 by Jampol Zimet LLC. Click here to read the original entry.

On February 15, 2013, the Alabama Court of Civil Appeals released its opinion in CVS/Caremark Corp. v. Gloria Washington wherein it addressed the affirmative defense of judicial estoppel in the workers’ compensation context. Specifically, the Court noted the availability of the defense but only when properly pled.

The Court of Appeals had previously addressed the issue in White Tiger, Inc. v. Paul Clemons (released January 13, 2012). In that case, the Court ruled that a claimant’s assertion that he was available and able to do some work at his unemployment hearing, did not prevent him from being awarded permanent and total disability benefits in his workers’ compensation case. The Court noted that being willing and able to do some work does not necessarily mean that you are able to secure employment that you are physically able and qualified to do. In the workers’ compensation case the plaintiff testified that he could not secure work because of his disability but he would give it a shot if someone hired him for a job he was qualified to do. For this reason the Court held that the two statements, in separate judicial proceedings, did not contradict one another in order to satisfy the necessary criteria for judicial estoppel to apply.

In the more recently decided Washington case, the Court held that the employer waived its right to assert judicial estoppel as a defense by not affirmatively asserting or pleading it. The Court further noted that the employee would have been judicially estopped from prevailing on a claim for permanent and total disability benefits based on the Court’s rationale in Clemons. The Court distinguished the two cases because the employee in Washington testified in her workers’ compensation case that she could not work at all because of her pain and she had not sought employment. The employee further admitted that she misrepresented her condition and ability to work in her claim for unemployment benefits. Unlike the Clemons case, in which the plaintiff testified he would give it a shot if he was hired in a position he was qualified for in the workers’ compensation case, the employee in Washington testified that she could not work and had not sought work because her injury/pain prevented her from working at all. Therefore, the two statements were in direct conflict of one another.

Practice Pointer: Judicial estoppel is a viable defense in workers’ compensation cases but only if it is affirmatively pled.

_____________________________

ABOUT THE AUTHOR

The article was originally posted on February 20 by Joshua G. Holden, Esq. of Fish Nelson, LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Fish Nelson is a member of The National Workers’ Compensation Defense Network (NWCDN). If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at jholden@fishnelson.com, 205-332-1428 or any firm member at 205-332-3430.

In Alabama, an aggravation of a preexisting condition can be treated as a new injury if the claimant was working without restriction prior to the accident date or date of last exposure to cumulative trauma. This is similar to the law in Iowa. Recently, an Iowa workers’ compensation matter (McQuown v. Brecht Trucking, Inc.) was initially decided in favor of the employer based, in large part, on medical testimony distinguishing between aggravation and symptoms. According to the testifying doctor, an aggravation means that an underlying situation was made to be medically worse, which is different than merely experiencing symptoms of a preexisting condition while performing work duties.

Iowa Workers' Compensation cases can go through several levels of appeal. The above case was first tried before a Deputy Workers Compensation Commissioner who issued an arbitration decision in favor of the employer. The case was then appealed to the Iowa Workers Compensation Commissioner which reversed the arbitration decision. The employer now has the option of appealing the matter to the Iowa District Court.

My Two Cents:

Although this is an Iowa case, it is a must read for anyone that handles Alabama workers’ compensation matters. It presents an interesting argument which employers and treating physicians should consider when presented with an aggravation claim.

_________________________________________

About the Author

This article was written on January 17, 2013, by Michael I. Fish, Esq. of Fish Nelson LLC, a law firm dedicated to representing employers, self-insured employers and insurance carriers in workers’ compensation matters. Click here to read the original article. Fish Nelson is a member of The National Workers’ Compensation Network (NWCDN). If you have any questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at mfish@fishnelson.com or any firm member at 205-332-3430.

Plaintiff Susan Early was allegedly injured while a passenger on one of Carnival Corporation’s ships. A claim was initiated, then (apparently) resolved. The mediator in the matter filed his report on November 21, 2012. That report stated that the parties had settled subject to the condition that the Court retain jurisdiction to enforce the terms of the settlement and determine the issue of a possible LMSA if one were needed. Early motioned the Court for Determination of Whether a Medicare Set Aside is Required. The terms of the settlement negotiations were:

1)Carnival will pay Early an undisclosed sum;

2)Each party will pay its own attorney’s fees and costs;

3)Early will execute a release for Carnival;

4)Carnival will be responsible for the mediator’s fees; and

5)The parties DISAGREE on whether an LMSA was required, but agree to submit the issue to the Court and to abide by its determination.

Early’s motion argued that an LMSA was not required under the Medicare Secondary Payer (“MSP”) Act. Carnival filed its response, urging the Court to conclude that an LMSA was required.

Analysis.

The Court begins by providing a succinct recitation of the MSP Act. Then, the Court describes how MSA analysis has emerged as means to address the future medicals issue. After detailing what actually constitutes a settlement in Florida, the Court turns to the question of whether the parties have an agreement to settle the claim.

The Court concludes that the parties agreed on four out of five essential terms. The term the parties could not agree upon was the LMSA issue, and asked the Court to fill in the blank on their behalf. The Court declined the opportunity to do so.

The Court distinguished this fact pattern from two others which appear routinely in other opinions addressing LMSA issues: 1) cases where the parties have a settlement agreement and agree that an LMSA is required, but cannot obtain review and approval of the LMSA from the Centers for Medicare & Medicaid Services (“CMS”); and 2) cases where the parties have a settlement agreement but disagree as to whether those terms included the creation of an MSA. Here, the parties did not ask the Court to enforce a settlement agreement; they asked the Court to assist with a critical term of a potential settlement agreement. While the Court noted the “conscientious and diligent” efforts of counsel to uncover the issue, it was not within the Court’s dominion to gap fill with respect to this essential term of the potential settlement agreement.

Takeaway.

This case is another example of the LMSA issue derailing what is (otherwise) a perfectly acceptable settlement agreement. These issues should become much less obtrusive after CMS issues final guidance about liability settlements and future medical expenses under the MSP Act. That guidance is expected to be released later this year. Until then, the best approach is to proactively address the issue, and evidence exactly how you have arrived at your conclusion on the future medicals issue. That approach, coupled with the Court’s conclusion in Guidry v. Chevron , highlights the importance of utilizing a formalized approach to MSP compliance. When addressing future medicals issues under the MSP Act, a formalized approach will yield complaint results every time.

Having a formalized settlement process that integrates these core concepts will achieve efficiencies and enhance the effectiveness of settlement programs while ensuring closure on the file. Such a formalized settlement process should take into account the timing and coordination issues which may hinder successful LMSA analysis. Thus, screening a case up front to verify entitlement and identifying a claimant as an MSA candidate early on is the proper launching point for any LMSA analysis. As parties move towards resolution and identify the prospective gross award, they can then determine (consistent with CMS’s basic rules issued in the workers’ compensation settling) if a future medical allocation exists within the gross award, either in the form of a specific carve out or implicitly contained within the one undifferentiated lump sum.

The DRI MSP Task Force continues to track relevant judicial opinions and guidance from CMS in order to ensure compliance for you and your clients. We continue to stress the importance of utilizing a formalized approach in addressing the LMSA issue on every single claim, as that process will, in and of itself, ensuring compliance on the LMSA issue.

[3] The Court cites to a recent article published by the American Bar Association which was co-authored by John V. Cattie, Jr., DRI MSP Task Force Vice Chair. See also Medicare Set-Aside Arrangements Under the Medicare Secondary Payer Act, 42 The Brief, n. 10, Fall 2012.

As football season approaches, many Americans will be discussing Sunday night’s games around the Monday morning water cooler. One topic of conversation may be the recent lawsuits players have filed against the National Football League™ for closed head injuries and post-concussion syndrome. Certainly, within the legal community, many have been discussing the merits of these lawsuits. However, as food for thought, is there a possibility that these lawsuits will never even reach that stage of litigation where defenses like the players’ assumption of the risk will even be addressed? More specifically, is there a real possibility that the NFL™ could successfully argue that the lawsuits are completely barred by exclusive remedy provisions contained in workers’ compensation laws?

At the foundation of states’ workers’ compensation statutes is the theory that workers’ compensation benefits and claims born out of work-related injuries are the exclusive remedy for employees who are injured in the course and scope of their employment. While there are narrow exceptions, generally, an employee is barred from bringing a civil action against his or her employer. At least where I practice, whether a person is considered an employee for purposes of workers’ compensation benefits is ultimately an issue of fact, requiring an examination of several factors that go to the amount of control the business has over how the individual performs his or her job duties.

Whether the NFL™ is actually an employer appears to be a widely-discussed topic in the legal community, with commentators split on the issue. While many different post-concussion syndrome lawsuits have been filed, a lawsuit directly involving several former and current players has been filed in the Eastern District of Pennsylvania, alleging 13 counts against the League as well as counts against Riddell, a manufacturer of sports equipment. The plaintiffs in this lawsuit argue that the NFL™ is not an employer because the individual teams are considered separate entities under the law, citing to American Needle v. NFL, 130 S. Ct. 2201 (2010), a case involving intellectual property and antitrust laws. While that case holds that each team is a separate legal entity, the Court also concedes that those teams often have to achieve a common goal of promoting the League.

Furthermore, Plaintiffs’ complaint actually contains allegations that contradict their assertion that the NFL™ is not their employer, including alleging that it governs the conduct of the individual teams, establishes rules and policies for those teams and players, and gives money to the individual teams. If an employer-employee relationship is established by control over the players, plaintiffs’ own complaint makes a persuasive argument for the NFL™ that their claims are barred by exclusive remedy provisions contained in workers’ compensation statues. Buttressing this is the National Football League’s collective bargaining agreement with the teams and its players. The 2011 agreement encompasses 316 pages and contains terms specifying rules that both teams and players must abide by in almost every aspect of conduct related to the performance of the players’ job duties. This agreement arguably exerts a considerable amount of control over how teams and players are allowed and/or required to perform their jobs. In addition, historically speaking, most of us are familiar with the National Football League’s ability to punish players for acts committed inside and outside the stadiums, including driving with a suspended license (Vince Jackson), shooting oneself in the leg at a nightclub (Plaxico Burress), excessive or inappropriate celebration (Terrell Owens), or violating the League’s uniform policy (Chad Ochocinco). Certainly, this amount of control over the players supports a viable argument that the National Football League™ could be an employer within a workers’ compensation arena.

That being said, obviously this issue is not as clear cut as it seems, especially when considering the players’ allegations date back to 1968. Additionally, the 2011 collective bargaining agreement leaves room for arguments on both sides. Specifically, the agreement does not define the League’s relationship to the players, and while it mandates workers’ compensation rules, the responsibility of insurance is left to the individual teams. Moreover, the 2011 collective bargaining agreement is not the only one at issue, and it remains to be seen what prior agreements could affect a successful outcome for the League. One thing is certain: the NFL™ could certainly attempt this argument as it provides a viable option for releasing it from paying any damages to the players in defense to not only this lawsuit, but future lawsuits for work-related injuries.

On June 28, 2012 the Supreme Court of Nevada changed the calculation of medical damages in personal injury suits. Tri-County Equipment & Leasing v. Klinke involved a woman/employee who was injured, by a third-party, while within the course and scope of her employment. The employee received workers’ compensation benefits and then sued the third-party for negligence. At trial the employee admitted evidence that her medical providers billed her a certain amount. The defense then sought to admit evidence that the medical providers had accepted, as payment in full, a lesser amount from workers’ compensation. The district court refused to admit the amount paid and the issue was appealed.

The Supreme Court reversed. “Applying Nevada law, we conclude that evidence of the actual amount of workers’ compensation benefits paid should have been admitted and that a clarifying jury instruction provided by statute should have been given.”

In resolving this case, the court ruled narrowly. It seems to say evidence of the amount billed AND the amount paid is admissible based under NRS 616C.215(10). Meaning the employee could tell the jury how much the providers billed, but the defense can state how much the providers accepted as payment in full. “Applying Nevada law, we conclude that evidence of the actual amount of workers’ compensation benefits paid should have been admitted and that a clarifying jury instruction provided by statute should have been given. “ Once this evidence is admitted, the jury decides the reasonable value of the services.

The court did not address any other context like Medicaid or other governmental programs with similar discounts. “Because the amount of workers’ compensation payments actually paid necessarily incorporates the written down medical expenses, it is not necessary to resolve whether the collateral source rule applies to medical provider discounts in other contexts.”

So why is this on a discovery blawg? Footnote six.

[I]t is apparent that there are numerous reasons for medical provider discounts, including discounts that result when an injured party’s insurance company has secured medical provider discounts as part of the health insurance plan. At least in those circumstances, such benefits may reside within the scope of the collateral source rule, although that is a legal issue we leave for a case that requires its determination. Whether the collateral source rule applies to other types of medical expense discounts would require evidence of the reason for the discount and its relationship to the third-party payment.

I read this as a hint that, if the court is to rule on how this issue applies beyond the confines of NRS 616C.215(10), it will expect the defense (presumably) to present, or at least make an offer of proof, consisting of “evidence of the reason for the discount and its relationship to the third-party payment.”

Medicare expands resolution options to include a new Medicare repayment program for small settlements or judgments. This program will be available starting in February 2012 and applies to cases settling for $25,000 or less. Under this program, Medicare will provide final conditional payment amounts before settlement under certain circumstances. This program has the potential to revolutionize the settlement process for many Medicare beneficiaries, their counsel, and settling parties. The foundation of that process is to start the verification process early.

Recently, the Centers for Medicare and Medicaid Services (“Medicare”) released guidance (the “Alert”) relevant to conditional payment reimbursement under the Medicare Secondary Payer (“MSP”) Act (42 U.S.C. §1395y(b)(2)). This guidance permits certain Medicare beneficiaries to receive a final conditional payment amount from Medicare prior to date of settlement. Historically, Medicare’s conditional payment reimbursement process has not allowed a Medicare beneficiary or settling parties from obtaining such information from Medicare or its recovery contractors. Under this small settlement option, for a Medicare beneficiary to obtain a final conditional payment amount prior to settlement, the fact pattern must meet all of the following criteria:

The liability insurance (including self-insurance) settlement will be for a physical trauma based injury (the settlement does not relate to ingestion, exposure, or medical implant);

The total liability settlement, judgment, award, or other payment will be $25,000 or less;

The Date of Incident occurred at least six months before the beneficiary or representative submits the proposed conditional payment amount to Medicare; and

The beneficiary demonstrates that treatment has been completed and no further treatment is expected either through a written physician attestation or by certifying in writing that no medical treatment related to the case has occurred for at least 90 days prior to submitting the proposed conditional payment amount to Medicare.

If the case meets all of these qualifying criteria, then Medicare, through its recovery contractor, the Medicare Secondary Payer Recovery Contractor (“MSPRC”), will provide a final conditional payment amount prior to settlement. This final conditional payment amount provided by the MSPRC will only be valid if the Medicare beneficiary settles a claim within sixty (60) days of the date of Medicare’s response. According to MSPRC, this option will be available to Medicare beneficiaries starting in February 2012, and will effectively allow Medicare’s related claims to be identified pre-settlement. While the process has not been fully defined, it is likely that once settlement is finalized, the process of requesting a final demand amount from Medicare (by providing gross settlement amount, fees, costs and expenses) will remain the same, regardless of whether this small settlement resolution program has been utilized.

Starting the Medicare repayment process early provides the best opportunity to comply with all Medicare Secondary Payer obligations while expediting the case. Medicare’s 2012 small settlement resolution program reinforces the need to START EARLY! To take advantage of this program in a $25,000 or less case means needing to know if an individual is Medicare enrolled, and if so, how much in medical expenses has Medicare paid conditionally. Having a formalized settlement process that integrates these core concepts will achieve efficiencies and enhance the effectiveness in settlement proceedings. Such a formalized settlement process should include an analysis of the applicability of this small settlement resolution program. Thus, screening a case/claim up front to verify entitlement, establishing a tort recovery record with Medicare early in the process and obtaining the first conditional payment letter from Medicare (all as part of a formalized settlement process) and resolution path is the proper path to take advantage of this small settlement resolution program. Although Medicare currently does not intend to include exposure, ingestion or implantation cases in this program, the Alert identifies that this will be a work in progress. As a result, if this program creates the intended results that benefit the settling parties, taxpayers and the Medicare program, an extension of this program in 2013 may not be out of the question.

Medicare intends to issue additional guidance on how to participate in this program in January 2012. The DRI MSP Task Force will provide further program details once they have been released. Until then, we continue to stress the importance of verifying Medicare enrollment as early in the settlement process as possible, as that information will better define the scope of the settlement continuum; from reimbursement to reporting to potential future cost of care issues.

CMS Announcements on Fixed Percentage Option for Settlements of $5,000 or less, $300 Threshold Limit for Reimbursement, and Identification of Contractor for Medicare Secondary Payer Recovery

The Centers for Medicare and Medicaid Services (“CMS”) announced an option which will allow for payment of a simple fixed percentage on small dollar liability insurance or self-insurance settlements for physical trauma-based injuries. Effective November 7, 2011, in cases where the settlement is $5,000 or less, a Medicare beneficiary may opt to resolve Medicare’s recovery claim by paying Medicare 25% of the total settlement instead of using the standard recovery process.

The benefit of this option is that parties will be able to calculate the amount of reimbursement due to Medicare immediately during settlement negotiations, without waiting for the plaintiff/claimant to obtain a Final Demand Letter from CMS.

This fixed percentage option is not applicable --

to claims involving ingestion, exposure or medical implants

if Medicare has already issued a Final Demand Letter or other request for reimbursement

if plaintiff/claimant will receive other settlements, judgments, or payments related to the injury

In addition, CMS announced that Medicare will not seek to recover in cases where the plaintiff/claimant received a lump sum settlement of $300 or less. The $300 threshold is not applicable –

to claims involving ingestion, exposure or medical implants

if plaintiff/claimant will receive additional settlements on the same injury

Finally, effective October 1, 2011, CMS has contracted with Group Health Incorporated to perform the Medicare Secondary Payer recovery activities while a full and open competition for this work is being conducted. The current phone numbers and mailing addresses for these activities remain unchanged.

For more information, see the Medicare Secondary Payer Recovery Contractor website, at http://www.msprc.info, or the CMS website at https://www.cms.gov/MandatoryInsRep/